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Mediation in Rhode Island pension lawsuits fails

Erika Niedowski Associated Press

Updated:
04/11/2014 01:56:07 PM EDT

PROVIDENCE, R.I. (AP) — Talks to salvage a proposed settlement designed to end the legal fight over Rhode Island's 2011 landmark pension overhaul have failed and the original court challenge is moving ahead, both sides of the case said Friday.

Gov. Lincoln Chafee and General Treasurer Gina Raimondo said the settlement agreement failed "due to a small group of union members." They called it "disappointing and frustrating."

Public-sector unions and retirees had sued over the state's 2011 pension-overhaul law, and the proposed settlement was an attempt to resolve the litigation. Six groups had to approve the settlement, and five — including teachers, retirees and firefighters — did.

But the plaintiffs announced Monday that police union members, the smallest of the groups, had rejected it. Judge Sarah Taft-Carter ordered continued mediation.

"While we are disappointed this settlement was not ultimately able to come to fruition, we continue to believe that the pension changes enacted by our General Assembly are constitutional, the state has strong legal arguments to support its positions and will begin to prepare for litigation," Chafee and Raimondo said in a joint statement.

A trial is scheduled for September.

The pension law, a model for other states seeking to rein in pension costs, was designed to save Rhode Island $4 billion over the next 20 years.

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The proposed settlement offered retirees a modest pension increase of $500 and additional future increases sooner than the current law allows. It preserved most of the other sweeping changes approved by lawmakers.

The plaintiffs said Friday the state ended the mediation.

"The plaintiffs abided by the judge's order to explore a path to a new settlement agreement, but the state decided it would rather pursue costly and drawn-out litigation rather than reach a reasonable agreement to guarantee stability and predictability to the pension system," said spokesman Ray Sullivan. "We are now prepared to take the necessary steps in proceeding to trial."

Debbie Rich, a spokeswoman for Chafee, said it wouldn't comment "on the substance of the mediation."

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